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Late VAT payments and interest
Newsletter issue – January 2023
The new penalty regime for late payment of VAT is fairer to those who miss the VAT payment deadline by a few days.
For Vat due in relation to periods beginning on and after 1 January 2023 you will have up to 15 days to pay, or arrange a time to pay agreement, without incurring a penalty. For the first year of this new system, you will have 30 days to pay the VAT liability in full instead of 15 days.
From 2024 onwards the new late payment penalties will be applied in two parts:
First penalty:
- 2% of the VAT unpaid at day 15; and
- a further 2% of the VAT unpaid at day 30.
If the payment is made after day 30 the first penalty will be 4% of the amount due. However, if full payment is made between days 15 and 30, this first penalty will be set at 2%.
Second penalty
From day 31 the penalty is charged daily, based on an annual rate of 4% of any outstanding amount.
Interest
The rate of interest applied for late payments of VAT will be the Bank of England base rate plus 2.5%. Interest will be paid on repayments at the Bank of England base rate minus 1%, subject to a minimum rate of 0.5%.
There is no carry forward of default periods or surcharge levels from the old VAT penalty system into the new late filing or late payment penalty regimes.
What our clients say about us...
"Paul has provided accountancy services to my company for 2 years now. I can recommend Paul very highly; his skills as an accountant are highly detailed and professional and he is always available to provide advice. One aspect of the way Paul works that I greatly appreciate is a preference to meet face to face when there is a detailed conversation to be had. I personally find this more productive and is a benefit of working with a small accountancy firm that you wouldn't get with the large faceless providers."
ALISTAIR FAIRWEATHER - PROGRAMME & PROJECT MANAGER, DELIVERING/RESCUING I.T. 7 BUSINESS CHANGE WITH BUDGETS UPTO £50M INC SUPPIER MANAGEMENT
"I couldn't ask for more from Paul as an Accountant. Paul has been accountant to Work Relief Charity Recruitment for just over a year now and is proving an invaluable asset. Accurate, knowledgeable, flexible with an emphasis on service delivery, I would recommend Paul's services to any organisation looking for an accounts professional."
Neil Price - Managing Director at Work Relief Charity Recruitment
"Paul was a referral from a family member when I started my business 2 years ago. As this was the first time I had ever run my own company I was totally clueless over the financial side of matters and was worried that I may have made mistakes in any of my accounting. I needn't have worried as after enaging Paul for a set monthly fee he was always there on the end of the phone for all sorts of questions I had and no matter how trivial they were Paul gave me all the information I required and more and did an excellent and painless job at the end of my first year! Couldn't ask for any better to be honest. Just two words - hire him!!!"
Lee Westrap MBCS - Director - Bulldog IT Services
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